12 23 2021 Moog Proxy - FY2021 - FINAL - Flipbook - Page 22
The Process Used to Determine Compensation
Base Salary
The process for setting annual base salaries is one whereby the CEO makes recommendations for all other officers' merit-based
salary increases and, occasionally, base salary adjustments needed to position an executive officer appropriately against market
benchmarks. The Executive Compensation Committee approves or adjusts those recommendations for a final determination and
determines the base salary adjustment for the CEO. As part of this process, the CEO prepares a performance appraisal for each
executive officer, including himself, which is reviewed in detail by the Executive Compensation Committee. These performance
appraisals take into consideration:
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•
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the outcomes achieved by the business unit or functional area for which the officer is responsible;
the conduct and contribution of the officer and the organization he/she manages in achieving overall Company results;
and
the officer’s achievements in developing organizational strength for the future.
In developing his recommendations for base salary increases and adjustments for the calendar year for the NEOs, other than
himself, in 2021, the CEO was also guided by the pay increase made across other Moog sites worldwide. During fiscal 2021,
Messrs. Scannell, Trabert and Roche received an increase to base salary of 3% and Mses. Walter and Athoe received an
increase to base salary of 6%.
Short Term Incentive (STI)
Annual bonuses paid to senior executives are developed in accordance with the STI plan introduced in fiscal 2016. For the
approximately 400 participants within this group, payments under the STI plan are paid based on growth in EPS and FCF
conversion. "On target" performance would be EPS growth of 10% and FCF conversion of 100%.
The bonus amount payable to each participant is determined by multiplying the participant’s base salary by the sum of the
following: (i) the product of the percentage growth in EPS for the fiscal year and a multiplier based on the participant’s position;
plus (ii) the product of actual FCF conversion for the fiscal year and a multiplier based on the participant’s position, as expressed
in the following formula:
Base Salary x [(% Increase in EPS x EPS Growth Multiplier) + (Actual % FCF conversion x FCF Multiplier)] = Total Bonus
There are multiple levels used within the STI plan for each performance multiplier, which vary based on a participant’s
responsibilities.
During fiscal 2021, the NEOs, other than the CEO, were eligible to receive a bonus that is equal to the participant’s base salary
at year end multiplied by the sum of (i) the percentage improvement in EPS times a factor of 3.375 and (ii) the FCF conversion
achieved multiplied by 0.1125. For the CEO, the same calculation was used but with multipliers of 4.5 for EPS improvement and
0.15 for FCF conversion. The multipliers are used to achieve bonus payments, which in years of strong earnings growth and FCF
conversion are somewhat comparable to the bonus plans for executives in other companies in the peer group identified by Korn
Ferry.
Payments under the STI plan are subject to an annual cap based on a percentage of base salary and are established at the
same time the plan year multipliers are set. The fiscal 2021 cap was 120% for the CEO and 75% for all other NEOs.
For fiscal 2021, the CEO received an STI payment of 80% of base salary, while other NEOs received an STI payment of 50% of
base salary. These payments were made below the amount that would ordinarily have been paid under the STI plan at the
determination of the Executive Compensation Committee and were paid in cash.
The Company’s EPS increase, FCF conversion and NEO bonus history over the last three years is as follows:
Year
EPS Increase %
FCF %
NEO / CEO Bonus %
2021
55.6%
105%
50.00% / 80.00% (1)
2020
0.0%
2,066%
45.00% / 60.00% (2)
2019
90.7%
35%
44.30% (3)
(1) Fiscal 2021 payment was made all in cash at two-thirds of the capped payout level that would have otherwise been paid
under the plan formula. This adjustment was made at the determination of the Executive Compensation Committee due to
the continued impacts of the COVID-19 pandemic.
(2) Fiscal 2020 payment was made at on-target payout level at the discretion of the Company given the wider context of the
pandemic; formula under the plan would have resulted in a larger payment.
(3) Fiscal 2019 payment level was the same for the NEOs and the CEO.
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